Monday, 19 October 2009

Goodbye, Macroeconomics

We are in the midst of a severe economic crisis, the second in about a decade, and the third for Latin America and Asia. It appears that information based economies are volatile. This is partly due to the fundamental price deflation in some of the core information services and products, and partly due to the much greater speed of transactions that outpace the ability of traditional institutions to cope. Information technology contributes to the volatility. But can the same technology also provide new tools for stabilisation?

Cyclical swings in the economy are as old as mankind. The Bible tells us about seven fat years in Egypt followed by seven lean years. Each economic system has its economic policy instruments to deal with swings. In ancient Egypt, Joseph’s warnings led to the creation of granaries. In feudal ages, the tools were control over the composition of coins, and severe restrictions on land and its workforce. These policies, in turn, became outdated for the industrial age, which pursued aggregate demand enhancement by governmental spending and taxation, control of the money supply, and manipulations of interest rates.

So when the present economic crisis hit, governments dealt with it in a traditional way through broad-based stimulus spending and through interest rates. But it is unclear whether the remedies of the industrial age apply. Demand is not the main problem of the information economy. People consume more bits and minutes than ever. The problem is prices, together with the inability to monetise many information activities. This leads to early over-expansions to gain market share, and subsequent contractions.

Nor is the pace of these macro-responses adequate for the accelerating speed of the information economy. By the time the emergency moneys have been actually spent, we are likely to be out of the recession and they might stimulate inflation.

The new type of problem, in contrast, is the enormous flow of computer-based economic activity that is increasingly impenetrable to interpret or respond to. Yet proponents of the traditional tools mostly got upset when the new elements of the economy undermined their traditional tools.

As e-money emerged, symposia were full of professors of macroeconomics and central bankers lamenting the difficulty of controlling this new supply of money. In other words, the efficiency of the advanced economy had to serve the efficiency of monetary policy, not the other way around.

Instead of suppression, how could the new technologies create new tools for government?

The most important aspect is the ability of the new technology to differentiate and customize. On the internet, each packet is identified as to sender and receiver. Which means that one can identify users, and uses. And if we can identify, we can differentiate.

This is very powerful. Traditional macroeconomics was very aggregate. It was their essence. The reasons were two: for theorists, it was easier to write equations that way. And for policy implementation, it was difficult, in very practical administrative terms, to disaggregate the many economic agents in a society.
But now, we have tools that can differentiate. With proper legal authorization, a central bank could charge different overnight rates to different banks or vary reserve requirements. Sales and other taxes could be varied selectively for different products, regions, or users. Tax credits could be tied to spending for particular uses. Stimulus money could go towards spending or investments that are above the level of last year.

To give a close analogy: In the past, toll roads could charge motorists only in a very undifferentiated way. But now, with automated billing and stored payment systems, we can charge different prices by time of day, by frequency of use, by the characteristics of the driver, by the characteristics of the car, and by the proximity of a driver’s residence to public transportation alternatives. In sum, we possess a much finer tool than before to stimulate and to depress demand for transportation, and to do so at a lower cost due to the ability to pin-point incentives.

We need, of course, to deal with some implications. One is on individual privacy. To differentiate one needs to know a lot. But this problem could be resolved through a system of pseudonyms and trusted intermediaries. A second problem is international trade. Basically, could a government differentiate in favour of its own people? The World Trade Organisation rules say no. But that is likely to become a relic of the industrial age.

The industrial age was the age of massification. Mass production. Mass consumption. Mass media. Mass advertising. But not any more. All around, we see customisation and individualization. Macroeconomic activity by government will eventually follow, and become a sub-aggregated ‘mezzo’ economic policy. Economists, technologists, and policy analysts should work to develop these tools.

The writer is professor of finance and economics at Columbia University.

Tuesday, 13 October 2009

Why the fuck is Sasol doing business in Iran? Mind you, if they dont, the frogs will...

In other news, Australians are racist, but they dont understand why.

I cant tell you how many people have posted this on their facebook pages with the line 'Is this racist?' or 'I think this is ok because Australians know how to laugh at themselves' or some such shit. Mu'fuggah, if you need to have it explained to you, you've already lost...

Saturday, 10 October 2009

Turns out that someone filmed most of the Andrew Bird gig I was at on Thursday night (from a very similar angle to the one in which I was standing). Such a phenomenal show, despite the fact that he was a little sickly:

And the best part (when he played with St. Vincent at the end), doing a Dylan cover:

Friday, 9 October 2009

"Police National Commissioner Bheki Cele will soon be referred to as "general", he said in Johannesburg on Thursday.

"It will not be a distant future when you will be speaking to 'general' rather than 'commissioner'," Cele said at a media briefing following the launch of a television programme to be used in the fight against crime.Moves to change the ranks within the police force were under way after President Jacob Zuma made the call earlier this year.

"The process is under way ... internally we are almost there."

Deputy national commissioners Hamilton Hlela and Magda Stander were compiling the changes to the ranks and these would be submitted to Minister of Police Nathi Mthethwa soon.

Stander, speaking on the sidelines of the briefing, said the ranks were "demilitarised" in 1995 and this had an impact on the South African Police Service.

"We demilitarised the ranks in 1995 and that impacted on discipline ... there is lots of confusion because sometimes people ... talk about inspectors ... inspectors are supposed to be on buses."

Ah, no love, buses have conductors, like orchestras. Police services have inspectors and detectives, not generals.

Thursday, 8 October 2009

Hope you are having an amazing day and thinking of you tango-ing your birthday away!!Wishing we were all together to celebrate but know we will have a belated celebration one of these days! lots of love!

Wednesday, 7 October 2009

Monday, 5 October 2009

I cant tell you how much i wanted to love this album. I wasnt overly impressed with the stuff i had heard from BLK JKS before buying it, but i hadnt really given it a proper listen, and was sure i had missed something (because seriously, these must be the most hyped SA band since, well, ever).

I comfortable with all of the disjointed structureless arrangement, though i dont think it's handled particularly intelligently, but the production is just infuriating. I bought this on vinyl and the pressing wasnt great so i downloaded the digital copies of the songs (free with the vinyl) and even when i concentrated while listening to it on my best headphones, it ended up just sounding like a poorly recorded jam session. The vocals are constantly getting lost behind perpetually crashing cymbals and then reappearing with echo and some more droning white noise. It's impossible to make out any of the instruments, there are snippets of discernible melody, and then just more droning. I'm no sound engineer (where are you Sarah Jarvis?) but this just sounds amateurish, like its being abstract for the sake of being abstract and difficult to listen to, not because it actually adds anything. You know, like a David Lynch movie. That said, when the melodies do emerge, its quite engaging stuff (Summertime didnt make me want to turn the sound down) but not really enough to make me want to listen to it too often.

This is only an EP (that supposedly created some of the hype?) and i'm guessing there will be more variety on the full album, but to be honest, on the strength of this, i wont be rushing to find it.